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News Indirect Tax-GST

  • Jun 27, 2019
  • Ambiguity remains over GST on service charge

    The devil lies in the details and this could be true even in the case of restaurant bills. One such case is the applicability of tax on service charge and ambiguity remains on whether it can be taxed under Goods & Services Tax (GST) or not. Technically GST can be levied on service charge, if it is part of the total bill, as rules make it clear that any fee or charge, until exempted, will be taxable. However, the problem is with the legal character of service charge. The government has always maintained that it does not have any legal status and is purely voluntary in nature. This argument is contested by restaurants owners, who say that it is legal as it is mentioned along with the price list or in the menu. Interestingly, many consumers confuse service charge as a tax and believe that the S in GST stands for the same. But, it is not so. Seeking clarity on the issue, BusinessLine contacted officials in the Finance Ministry and found that there is ambiguity even among the officials. While one official said that to club service charge with food and beverage bill for calculation of GST is correct, another senior official said “service charge is not taxable.”

  • Jun 27, 2019
  • GST audit for small assessees to be desk-based

    Small Goods & Services Tax (GST) assessees will not have tax officials paying them a visit for the first audit of annual indirect tax return. According to the Audit Plan for 2019-20, prepared by the Directorate-General of Audit (Indirect Taxes) under the Central Board of Indirect Taxes & Customs (CBIC), small taxpayers mean assessees with turnover below Rs 7.5-10 crore and medium category includes taxpayers with turnover between Rs 7.5-10 crore and Rs 30-40 crore. Beyond this, assessees will fall under the category of large taxpayers. The turnover includes total taxable, exempt and zero rated clearances of goods and services, but excludes supplies during the year. The last date for filing the first annual GST return is August 31 and then the audit will begin.

  • Jun 24, 2019
  • Simplified GST, timely credit can help small units go overseas, feel experts

    With the emerging global trade war expected to throw up tremendous opportunities for Indian companies, representatives of trade bodies, small industry associations, banks and corporates felt a right ecosystem with a simplified Goods and Services Tax regime, lower taxes and greater lending support will help Indian SMEs tap the export potential. Speaking at a panel discussion, ‘Tapping into Global Trade — Challenges and Opportunities,’ at the SME Growth Summit presented by ICICI Bank and BusinessLine, the panellists urged the government to provide financial assistance to SMEs, assured orders for a minimum period of 3-5 years, availability of bank credit, tax rebates for Research and Development (R&D) and enhanced export incentives.

  • Jun 24, 2019
  • Anti-profiteering investigation: Mock purchases, premise visits planned to check B2B invoices

    Taxmen could carry out ‘mock purchases’, visit premises and check invoices issued by top 20 goods and services suppliers as part of anti-profiteering investigations in their respective areas under the new tightened framework under Goods and Services Tax. GST officers conducting antievasion verification, audits, inspections or search operations may also include checks from anti-profiteering perspective, according to the new stringent monitoring mechanism for taxmen to keep a check on companies for profiteering from reduction in tax rates or availability of seamless input tax credit endorsed by the Council.

  • Jun 22, 2019
  • GST Council: Anti-profiteering watchdog NAA’s term extended by 2 years

    The Goods and Services Tax (GST) Council on Friday extended the tenure of the anti-profiteering authority by two years to November 2021, in what went against its past assertions that the body will have only a transient existence and a non-intrusive character. The council also decided that in cases of profiteering, firms will have to pay a penalty of 10% of the amount cornered by not passing on benefits of GST rate cuts to consumers. It, however, deferred a plan to reduce tax reliefs for vehicles (EVs) and sent the proposals in this regard to its fitment committee. Also, the council extended by two months the last date for filing annual returns and audit forms (GSTR-9, 9A and 9C) for 2017-18 to August 31, 2019. The proposed simplified return-filing mechanism would be mandatory for businesses with turnover above Rs 5 crore from October, while it would be rolled out for all by January 1, 2020.

  • Jun 21, 2019
  • GST council meet: Rate cuts for electric vehicles, two-wheelers on agenda

    Finance minister Nirmala Sitharaman will chair her first GST Council meet on Friday as the Centre-state body is likely to deliberate upon slashing rates for electric vehicles (EVs) and other two-wheelers, and extension of tenure of the anti-profiteering body by another year. Sources said the Council could also extend the deadline for filing annual return form (GSTR-9) in the face of difficulty faced by taxpayers. Additionally, the Council in its 35th meeting would also consider granting approval for e-invoicing process that has been in the works since last month. The anti-evasion measure requires businesses to intimate a central portal at the time of issuing invoice to help the tax department keep track of transactions in real time.

  • Jun 21, 2019
  • FADA to GST Council: Charge late fine on net tax liability, not gross

    The Federation of Automobile Dealers Associations (FADA) has written to the GST Council, asking that the interest charged on automobile dealers in case of late GST payment, should be calculated on net tax liability instead of gross liability. The association said interest charged on gross amount in an event of late payment has led to undue hardship to dealers across the country, who are already under pressure due to poor sales and high interests on loans for operational purposes. FADA president Ashish Harsharaj Kale said many small businesses located in tier 2 and tier 3 towns face difficulties in GST compliances due to system mismatches. “We have requested that the interest provided should be calculated on net tax liability instead of gross tax liability which will help auto dealers in ease of doing business,” Kale said.

  • Jun 21, 2019
  • Manual check to only impact 3.5% ‘risky’ exporters in availing refunds

    The government on Thursday said the manual intervention introduced in the previously automated system of integrated GST refund to exporters would only apply to 3.5% of exprorters perceived to be ‘risky’ while the remaining exporters would continue to apply and receive timely refunds through the online system. As FE reported earlier, the Central Board of Indirect Taxes (CBIC) earlier this week instructed its Customs and GST formations to verify the correct availment of input tax credit (ITC) by few exporters who are perceived as “risky” on the basis of pre-defined risk parameters. Official sources said the government was matching turnover from exports with the income-tax returns filed them to detect discrepancy and foul play. This is being used to flag their consignment to the Customs database for additional checks.

  • Jun 20, 2019
  • Tax body seeks extension of GST return filing by four months

    Tax and legal consultants Wednesday complained about the time-limit of three months given to file the GST returns for 2017-18 as hundreds of amendments, notifications and circulars have made the Act very complex. Officials of the Tax Bar Association, a body of over 400 members of chartered accountants, company secretaries, cost advocates and tax consultants, said that the government has made the entire GST procedure and filing of returns very "confusing with hundreds of changes in the rules and taxes".

  • Jun 19, 2019
  • Exporters’ wait for I-GST refunds may get even longer – Here’s why

    In what is a setback to the automated process of refunds for exporters under goods and services tax (GST), the indirect tax department has decided to introduce manual checks to curb large-scale tax evasion. The customs department would now hold the refunds until it receives “all-clear” signal from the respective GST field formations. “It has come to the notice of the Board that instances of availment of integrated GST refund using fraudulent input tax credit (ITC) claims by some exporters have been observed by various authorities,” a circular issued by Central Board of Indirect Taxes and Customs (CBIC) said on Tuesday. It further said some exporters were declaring a much higher value of exports in their GST returns compared to the value mentioned in the shipping bill. Since exports are zero-rated, the exporting firm gets back the entire Integrated GST (IGST) paid on the export.

  • Jun 17, 2019
  • Delhi and Puducherry lock horns with Centre over IGST distribution

    The distribution of the integrated goods and services tax (IGST) has become another point of dispute between Delhi and Puducherry, on the one hand, and the Centre, on the other. Delhi and Puducherry have for long been battling with the Centre for full statehood.The two are at odds with the Centre over their pending IGST dues for the first year of the roll-out of the indirect tax in 2017-18 (FY18). In the upcoming GST Council meeting on June 21, they are likely to ask the Centre to pass on their share of the IGST collections, which were distributed in an ‘ad hoc

  • Jun 17, 2019
  • Volume of litigation under GST regime to grow in a big way: Experts

    Last month, the power of GST officers to arrest tax evaders hogged headlines and courts’ time. Following conflicting orders from various high courts, the apex court stepped in. A three-judge Supreme Court Bench is now looking at the constitutionality of such arrest powers in course of an investigation. Similarly, conflicting views of advance ruling authorities have sent tax experts and businesses into a tizzy. Anti-profiteering disputes are being litigated at various fora by multiple taxpayers.

  • Jun 12, 2019
  • GST rates: Centre to resist demand for pruning 28% slab

    Several state governments are pitching for a further pruning of the highest GST slab of 28% but the GST Council meeting scheduled for June 20 here is unlikely to take a decision on this, as the Centre is wary of the revenue implications of the move.Two important items for which a rate cut to 18% has been sought are two wheelers and cement, for which the annual revenue impacts are seen to be Rs 8,400 crore and Rs 12,000 crore respectively. Clearly, for the Centre, which has seen a huge GST revenue shortfall of `1.6 lakh crore (against the original Budget estimate) and has set a daunting target of `1.14 lakh crore/month for the current fiscal, rate cuts on these items are unaffordable.

  • Jun 12, 2019
  • New GST return mechanism will be implemented in phases

    The Finance Ministry on Tuesday unveiled a roadmap for the implementation of the new GST return mechanism. It has also put in place a transition mechanism. The new mechanism will be used on a trial basis from July to September. For the large taxpayers (those whose aggregate annual turnover in the previous fiscal was more than ?5 crore), Form GST ANX will replace GSTR 1 from October.

  • Jun 10, 2019
  • GST Council to meet on 20 June, may fix Rs50 cr turnover threshold for e-invoice

    The finance ministry is likely to propose ?50 crore as the turnover threshold for entities to generate e-invoice on a centralised government portal for business-to-business (B2B) sales as it looks to curb GST evasion, an official said. The GST Council, which will meet on 20 June, will take a final decision on the turnover threshold for issuance of e-invoice for B2B sales after consultation with states. Analysis of return filing shows that as many as 68,041 businesses have reported a turnover of over ?50 crore and accounted for 66.6% of total GST paid in 2017-18.

  • Jun 10, 2019
  • More items likely to go off highest GST slab

    India could review the goods and services tax (GST) structure to further prune the number of items in the highest slab of 28% as it attempts to stave off a slump in demand. Some states have favoured a reduction in tax rates, worried that the slowdown may get entrenched, and have communicated their concern to the Centre. The GST Council may meet on June 20, ahead of the budget presentation on July 5, and these issues could figure in the discussions.

  • Jun 05, 2019
  • IGST credit accrued in FY18 won't lapse even if not availed in that fiscal: Finance Ministry

    The Finance Ministry Tuesday assured trade and industry that input tax credit accrued on import of goods by paying GST in 2017-18 will not lapse even if the taxpayer has not claimed credit in the same financial year. Addressing concerns raised by trade and industry regarding filing of annual returns for the first year (2017-18) of Goods and Services Tax (GST) roll out, the ministry also advised taxpayers to file the correct data about tax payment and other details as reported in monthly sales returns in annual return GSTR-9 by omitting the auto populated data.

  • Jun 05, 2019
  • TN streamlines enforcement systems for GST

    With implementation of Goods and Services Tax (GST) requiring a fundamental change in the way Commercial Tax Department functions, the Tamil Nadu government has prescribed a new approach with elaborate procedures in enforcing tax laws. The emphasis is on intelligence-based enforcement activities in an unobtrusive and efficient manner under proper authorisation and overall supervision and control of the Commissioner.

  • Jun 04, 2019
  • GST Council likely to tweak textiles rates in line with global markets

    The Goods and Services Tax (GST) Council, which is likely to meet for the first time after elections in the first half of this month, is likely to take up rationalisation of rates in the textile sector in line with the global markets. “Removal of anomalies in tax rates in the sector is one of several issues that needs immediate attention,” said a government source. Differential rates of textile items are causing hardships, especially on refund to exporters, he said. The government is concerned about the issue, he said.

  • Jun 03, 2019
  • GSTN move to give leg-up to software product firms

    A government bid to democratise access to accounting software by making it free for small companies and ensure compliance with the indirect tax regime will give a leg-up to Indian software product companies, helping them scale their user base and strengthen business. The Goods and Services Tax Network (GSTN) last week allowed small businesses, with a turnover of 1.5 crore or lower, to download a software that would help create invoices and account statements, manage inventory and prepare GST returns. Six firms are listed on the GSTN website which will offer software free of cost to the targeted 8 million small businesses, or nearly a seventh of India's estimated 55 million SME base.